Big Sound, a merchandising company specializing in home computer speakers, budgets its monthly cost of goods sold to equal 60% of sales. Its inventory policy calls for ending inventory at the end of each month to equal 30% of the next months budgeted cost of goods sold. All purchases are on credit, and 40% of the purchases in a month is paid for in the same month. Another 20% is paid for during the first month after purchase, and the remaining 40% is paid for in the second month after purchase. The following sales budgets are set: July, $500,000; August, $440,000; September, $470,000; October, $425,000; and November, $415,000. (Hint: For part 1, refer to Exhibits 7A.2 and 7A.3 for guidance, but note that budgeted sales are in dollars for this assignment.)

October November (1) Compute the budgeted merchandise purchases for July, August, September, and October. July August September Budgeted ending inventory Cost of goods sold (estimated) Required available inventory Budgeted beginning inventory Required purchases $ 0 $ 0 $ 0 $ 0 October After October (2) Compute the budgeted payments on accounts payable for September and October. Purchases paid in Purchases August September July purchases August purchases September purchases October purchases 0 (3) Compute the budgeted ending balances of accounts payable for September and October. September Purchases % unpaid as of Amount unpaid as September 30 of September 30 July purchases August purchases September purchases September 30 budgeted accounts payable Amount unpaid as October % unpaid as of Purchases October 31 of October 31 July purchases August purchases September purchases October purchases 0 October 31 budgeted accounts payable